Battle of the billionaires

Posted by Marc Hodak on May 22, 2008 under Economics | Comments are off for this article

Buffet says he likes Obama. Icahn says he doesn’t trust him on the economics.

“I personally think he would be a terrible president,” Icahn said, arguing that Obama would probably go on a “huge spending spree” that “the country can’t afford right now.”

It’s always difficult to comment on political opinions about economics because politics is so opposed to economics. Economics is about decision-making at the margin, where trade-offs are easy to discern, and decisions about trade-offs are easy to evaluate. Politics is about bundling decisions with the express purpose of making such trade-offs impossible. You don’t want that extra tax dollar to fund the war rather than children’s health care? Tough. Your taxes pay for the bundle, and you don’t have any choice about the bundle or about paying for it.

So, the economic bundle that goes with Republicans versus Democrats is too unwieldy to provide any clear comparison between the two. For example, Icahn presumably would have felt more comfortable about Bush than he does about Obama on economics (so would I), yet Bush oversaw a huge spending spree that this government couldn’t afford. That’s not damning to either Bush or Icahn; the spending spree is a built-in fact of life for any president given the powerful incentives toward irresponsibility that drive Congress.

On the other hand, if Buffet is so sanguine about the higher taxes and the capabilities of his Democratic buddies promising to bring them on, then he has a choice at the margin about that. So, why isn’t he giving any of his surplus wealth to the government instead of to a place like the Gates Foundation? Another billionaire offers a good answer to that.